I recently attended an event hosted by the ESRC which explored the recession and the green economy. It asked how we can best move to a ‘green economy‘ – an alternative economic model that incorporates social and environmental concerns – whilst also stimulating the economy and helping to move out of the depths of a recession.

A statistic quoted by Professor Paul Ekins was perhaps the most powerful ever cited in relation to the impacts of climate change on humankind: ‘if current emission pressures continue, by 2100, the world will only be able to support 1 billion people. The projected population for 2100 is 9 billion.‘ As a result of our inability or unwillingness to act 8 billion people may effectively cease to exist. This is worse than any prediction previously made and yet it represents the current trajectory, we are moving, like a juggernaut, along. He argues that we now face a low carbon imperative.

Developpement durableEkins argues that a transformation to a low-carbon economy is the biggest challenge facing human kind, but one that we must face with urgency and strength. The UK is already way behind other parts of the world. China, for example, will have put in place 100 GW of wind power by 2020. The UK will have 1.7 GW. Low carbon technologies will be at the heart of the next industrial revolution. Germany is also way ahead of the UK, providing increased jobs, outputs and exports through its transition to a low carbon economy. Ekins says there are three priorities for the UK government:

1) Fiscal stimulus (in the short term only) –

Support employment and skills which benefit from and contribute to developing a low carbon economy. Incentivise private investment in low carbon technologies. All public investment in a fiscal stimulus package should support low carbon objectives, even if this is not their primary purpose. For example, all hospitals should be built to the highest environmental standards. There should be no support for high carbon industries. We cannot continue with a business as usual approach. This needs to be a transformation. Increasing the energy efficiency of building stock is one of the greatest opportunities for labour intensive measures – contributing to economic growth. The government can also set an example by changing laws relating to double glazing on listed buildings and transforming their own to ‘low carbon friendly’ buildings.

2) Leveraging private investment

The UK is currently an unattractive destination for low carbon investment. Spain has reduced its investment in wind farms because of a lack of support from the UK Government. There needs to be the right mix of revenue support, capital grants, tax incentives, partnership investments and revolving funds.

3) Environmental tax reform

15-20% of tax revenue should come from green taxes by 2020. We need a green tax shift. This would give us a robust carbon price across all taxes and would lead to a large reduction in carbon emissions, an 450,000 increase in jobs and only a 0.5% reduction in GDP.

Ekins argues that the 2009 budget reveals some inkling of a tax reform. For the first time since 2000, fuel taxes will provide their greatest revenues. The trend to date has been falling revenues from fuel. But this needs to go further. Skeptics have argued that moving to a low-carbon economy would be fruitless because we would merely be buying ’embedded carbon’ – buying imported products that have been produced using high carbon processes elsewhere. This would mean that whilst our direct actions would signify a move to a low-carbon economy, our purchasing habits might not be so benign in their impact.


Ekins argues that undoubtedly we need a global response and a global framework to prevent some countries drastically cutting their greenhouse gas emissions whilst others continue using carbon intensive technologies regardless. However, the UK can and must, work unilaterally and become a ‘first mover’, setting an example to the rest of the world about what can be achieved and prove we are commited. There are likely to also be ‘first mover advantages‘ in doing so. Emerging markets will then follow suit.